Investing in Silver Mine Stocks

Investors prefer to own silver as a hedge against the damages done by government fiscal and monetary prices. Trading in gold or silver is the best way to boost investment due to the simple economics of supply and demand. Industrial use, jewelry, photography, coins & medallions consume ninety five percent of silver leaving just five percent for investment.

As economics say, decrease in supply and increase in demand dictate higher silver prices. Moreover, when countries like China announce a sudden depletion of reserves, it fires up a rise in prices on silver. Rather, than appreciating silver from a distance why not invest in it and take advantage of the economic model of price determination.

Futures contracts, coins and bullion, and mining stocks are some of the common methods of silver investment, but for past couple of years owning shares of silver mining companies has gained interest. Silver is slowing growing out of it big bully brother, gold's shadow with a price double since the last 10 years.

Although, investing in silver mines is not new to the investor kin, for the newbies there are three basic categories of mining stocks: Junior Exploration companies, Conglomerates and Silver specific mining companies.

Conglomerates: Many a times, silver is a by-product of gold and zinc mining. Companies leverage their existing resources to expand their production. Silver as a diversified product, share prices of conglomerates do not hold the same value as silver prices.

Junior Exploration companies: These companies gamble their capital on finding proven reserves, which the conglomerates ultimately buy since they have the infrastructure to reap and process the reserves. Purchase shares of many companies in this group and increase the chance to strike it rich.

Silver specific mining companies: These are companies that primarily produce silver and the prices are co-related to the prices on silver.

While investing in silver mining companies look out for factors like proven reserves, short-term production forecast, proven good management team, any legal issues, good cash flow & return on equity and assets and a strong balance sheet.

Investing in mining shares may not hold the same value as holding silver, but if you want to invest at the risk end of the spectrum yet reap rich rewards, this method offers a good boost for an investor. In addition, investors look at purchasing silver mining shares as a part of an overall portfolio diversification strategy to help reduce risk.

Guidelines For Investments In Silver   Buying World Coins With Confidence - (Do You Desire More Information on the Coins You Love?)   Do You Own Mint Packaged or Graded Coins? China Is Producing Knock-Offs of These Too   

Fall 2012 Market Outlook: Oil, Gold and Stocks

The U.S. broader market indexes have pushed to new 2012 highs over the past two trading sessions. Along with the equity move higher; gold, silver and oil have all followed suit. A combination of perceived European economic stability and more Federal Reserve bond-buying have delivered a 10% rise in equities, a 25% rise in WTI oil, and (gasp) a 27% increase in silver price over the past two months.

One must dig only slightly beneath the surface to realize this multi-month broad rally, now dubbed "the most hated rally" on CNBC, is based on nothing but a hope and a prayer. In the aggregate, corporate earnings only beat negatively-revised estimates by the same amount they have historically. Oil demand has been continually declining, and China and Indian central banks have eased their gold buying operations.

Overall, demand for investment-grade vehicles continues to decline, both in the U.S. and worldwide. For investors seeking a sanctuary in gold or European or U.S. equities, the six-month outlook is not promising. Now, temporary upward moves are sure to occur, but "buying and holding" in this economic climate is not prudent.

It seems more and more likely that the U.S. Federal Reserve will implement another round of bond-buying (QE3); however, there is still no indication that U.S. fiscal issues are any closer to being resolved than they were at this time in 2011. Until there is legislative movement on the Federal level by the Congress to guarantee a growth-promoting economic climate, our problems will continue, and get worse. One must look no further than the tepid monthly job growth through the summer.

So, what's the move? Well, as detailed in "An Ounce of Gold will be $800... " there are several strategies that may prove profitable over the next six months:

First, short silver. At its current price of nearly $34/ounce, the "poor man's gold" is actually just the sucker's gold. Silver is an industrial metal, and even though it has been considered a hedge against inflation and store of value, it really is just an expensive industrial metal. Look for a 50% move down in silver.

Second, sell gold. I don't like shorting gold because it is an internationally accepted store of value, and a true hedge against inflation, but at these bubble prices, gold is much too expensive to buy at these levels. I'll wait until sub $1000.

Third, short U.S. stocks. Unlike European equities, many U.S. stock valuations have held up and even soared over the past six months. The notion that European problems can be isolated to Europe is absurd.

Right now, Europe is off the radar, as the ECB has said they will buy an "unlimited amount of Spanish and Italian bonds." The problem with this strategy, much like in the U.S., is monetary policy cannot correct fiscal issues!

Fall 2012 may be when Ben Bernanke and Mario Draghi find out that artificial demand for U.S. and European bonds is, at best, a short-term patch for an economic emergency, not a long-term solution for a structurally-deficient economy. Don't be the one holding their bag!

Guidelines For Investments In Silver   Buying World Coins With Confidence - (Do You Desire More Information on the Coins You Love?)   Do You Own Mint Packaged or Graded Coins? China Is Producing Knock-Offs of These Too